As many Western countries start thinking about how they can borrow more at a lower cost, it might be possible that these governments turn to so-called “panda” bonds. China is looking to the future, and that means that the future might mean borrowing in yuan.
Over the course of the last few years, China has been taking steps to become an international player on the world economic stage. A few years ago, China made noises about getting rid of the US dollar as a de facto world reserve currency. China also set up bilateral agreements with developing countries to trade in yuan (also called renminbi).
Now, there appears to be increasing interest in borrowing in renminbi. David Marsh, a writer at MarketWatch, wrote an interesting commentary about the possibility of Western governments turning to “panda” bonds to fund their operations. While many Western governments are wary of the idea right now, Marsh sees it as a distinct possibility for the future, especially as China takes steps to gradually make the renminbi more internationally accessible.
Even though trading the renminbi isn’t something that is available to individuals right now, many are looking to the future and wondering what might be possible later.
At 16:10 GMT USD/CNY is at 6.2240, which represents a gain from the open at 6.2205.
If you have any questions, comments or opinions regarding the Chinese Yuan,
feel free to post them using the commentary form below.
